To The Moon

Highlight: Hedge funds are dumping positions in tech stocks at the fastest rate in a decade. Do you believe this tech stocks retreat is a reverse of 10 year bull market or just a short period of market sector style shifting？

1. Why Tech stocks declined the most in recent month？

Technology stocks have fallen a lot recently. In the first week of the year, tech stocks declined the first among the 11 major S&P sectors, closing down 5.67% overall. Also got a 6.29% decline in the past Month.

Weekly Sectors performance, Chart from https://finviz.com/

Monthly Sectors performance, Chart from https://finviz.com/

Inside the sector，the Large/Megacap tech stocks（market capitalization above $200 billion）were declined quite obviously in the past month：$(NVDA)$ declined 9.27%，$(MSFT)$ fell by 8.2%, $(AAPL)$ fell by 4.05%,$( ADBE)$ fell by 19.6%,$( CRM)$ fell by 13.6%, $(PYPL )$fell 2.95%，$(INTU)$ fell by 15.9%，$(AMAT)$ fell 2%，$(QCOM)$ fell By 2.28%$(，CDNS)$ fell by 9.9%, $(TXN)$ fell by 6.6%, $( AVGO)$ fell by 6% and etc……

Monthly Performance of Information Technology stocks, Chart From Tiger Trade

Megacap is a designation for the largest companies in the investment universe as measured by market capitalization. While the exact thresholds change with market conditions, mega cap generally refers to companies with a market capitalization above $200 billion.

After the market has sold tech stocks, it has turned to buy stocks in the energy, banking, industrial, materials, and consumer sectors.

Why Tech stocks being dumped？

• The Market worries about future rate hikes?

In early 2022, the Nasdaq Composite posted its biggest one-day drop since Feb 2021，after minutes of the FED's meeting showed the central bank could raise interest rates in March.

As a typical growth stock, technology stocks are more sensitive to interest rates. The FED policy turns to higher interest rates, which will drive up financing costs, which puts the valuation system of technology stocks that benefit from the low interest rate environment to the test, which usually means lower expected earnings growth for investors.

• A High Valuation Correction Needed?

Considering that U.S. information technology and biotech stocks have increased significantly in this round of economic recovery, and the stocks’ valuations are at a high level, with the rise in U.S. bond yields, the possibility of a correction is more likely.

According to fund filing data compiled by Goldman Sachs:At the beginning of Q4 2021, one third of its holding companies‘ Enterprise Value surpass 10 times than sales. The EV date was the highest level since 2002. Even some companies do not qualify as high-value tech companies, thus share price growth may not be sustainable.

For example, many star companies that hedge funds hold, such as Visa and Mastercard, have experienced significant losses.Now, you may figure out why we saw hedge funds dumping positions in tech stocks at a fastest rate in a decade.

2. The most or least crowded tech stocks trades by Hedge Fund

Accroding to Investment BankUBS,it had collected The Tech stocks lists which are themostor least crowded trades by Hedge Fund:(Pecentage are active weighs)

1. $(Visa)$, 0.25%
2. $(UnitedHealth)$, 0.21%
3. $(Charles Schwab)$, 0.16%
4. $(Thermo Fisher)$, 0.15%
5. $(American Express)$ , 0.11%
6. $(Mastercard)$, 0.1%
7. $(Meta Platforms)$, 0.1%
8. $(Charter Communications)$, 0.1%
9. $(Danaher)$ , 0.09%
10. $(Netflix)$ , 0.09%

10 Lists ofLeast crowded U.S. large caps:(Pecentage are active weighs)

1. $(Apple)$ , -2.19%
2. $(Tesla)$ , -0.83%
3. $(Amazon)$ , -0.61%
4. $(Microsoft)$, -0.34%
5. $(Nvidia)$, -0.32%
6. $(Berkshire Hathaway)$, -0.28%
7. $(Exxon Mobil)$ , -0.28%
8. $(Procter & Gamble)$ , -0.24%
9. $(Johnson & Johnson)$, -0.21%
10. $(Walmart)$, -0.18%

$(Apple)$ , $(Tesla (TSLA))$ ,$(Amazon (AMZ))$,$(Microsoft (MSFT))$ and $(Nvidia (NVDA))$ remaining in the top 5 of the list. We will continue to follow this data by monthly.Finally , hedge funds are selling overvalued software and semiconductor stocks also, which the volume of selling has reached its highest level in more than a decade also.

So, would you like to check your holdings, whether your shares are being dumped or being held?

What's your opinion on tech stocks retreat？ A reverse of Bull market or just a short period of market sector style shifting？